US fiscal cliff won't impact Indian IT: Nasscom

US fiscal cliff won't impact Indian IT: Nasscom

Despite fears the fiscal cliff in the US would lead to that country cutting budgets next year, the National Association of Software and Services Companies feels it is unlikely this would have an adverse impact on the $100-billion Indian information technology sector.

A fiscal cliff refers to the simultaneous expiry of tax breaks and the introduction of spending cuts.

Nasscom, which recently scaled down its estimate of growth in India's software services for FY13 from 11-14 per cent to 9-11 per cent, said with the election in the US over, "the worst may be behind us".

US fiscal cliff won't impact Indian IT: Nasscom

Analysts feel as the fiscal scenario in the US turns grim, there would be some impact on the Indian outsourcing industry.

"There could be automatic spending cuts and tax increases.

"To gauge the impact, we need to see who the key clients of Indian IT companies are.

"If corporate tax rates increase, it wouldn't augur well for the Indian IT industry. There may be some impact, but it needs to be seen what the extent would be," said Harit Shah, senior research analyst, Nirmal Bang Institutional Equities.

Asked if Nasscom would want to move to quarterly estimates, as business visibility was becoming difficult, Mittal said, "We might come out with a six-month guidance. But as of now, we do not see a reason to do so.